‘How Nigeria can be among top 10 economies by 2050’
NIGERIA has the potentials to rank among the top 10 economies of the world by 2050, if it could build its institutions to global standards, diversify the economy and sustain growth-friendly policies, the latest report from PwC Economists has stated.
Two other emerging economies that could experience such phenomenal lift, according to the report, are Indonesia and Mexico.
The conclusions were based on long-term projections of potential Gross Domestic Product (GDP) growth up to 2050 for 32 of the largest economies in the world, covering 84 per cent of total global GDP, titled: “The World in 2050: Will the shift in global economic power continue?”
According to the report, the current trend of global economic power shifting away from the established advanced economies in North America, Western Europe and Japan, will continue over the next 35 years, despite a projected slowdown in Chinese growth after around 2020.
The world economy has been projected to grow at an average of just over three a year from 2014 to 2050, doubling in size by 2037 and nearly tripling by 2050.
But there’s likely to be a slowdown in global growth after 2020, as the rate of expansion in China and some other major emerging economies moderates to a more sustainable long-term rate, and as working age population growth slows in many large economies.
Nigeria, Vietnam and the Philippines were identified as notable risers in the global GDP rankings in the long term, reflecting relatively high projected average growth rates of around 4.5 to 5.5 per cent per annum over the period to 2050.
Specifically, PwC Nigeria’s Chief Economist and co-author of the report, Andrew S. Nevin, noted that “over the past decade, Nigeria has boasted superior economic growth and with the right reforms and investments, it could become one of the world’s leading economies by 2030, with further progress by 2050.”
He added: “Nigeria’s potential advantages for future growth include a large consumer market, a strategic geographic location, and a young and highly entrepreneurial population.
“However, at the same time, we are all aware of the significant headwinds created by the rapid drop in the oil price, putting pressure on the fiscal and monetary systems, as well as reducing economic growth in the short term.
“To achieve its long-term economic potential, Nigeria will need to manage the oil price decline effectively at all levels of government and create a sustainable platform for diversification into the sectors that we know will drive the economy in the future – including power, agriculture, manufacturing, telecommunications, hospitality and real estate.
“According to our long term projections, Nigeria could sustain average growth of around 5 to six per cent per annum in the long run, following projected growth of around 6 to seven per cent in the rest of this decade, assuming broadly growth-friendly policies are pursued.”
Nevin also stressed that “while foreign investment has in absolute terms long been focused on the oil sector, portfolios are becoming increasingly diversified, moving towards the power, agriculture and mining areas of the economy that have demonstrated a comparative advantage in emerging markets vis-à-vis the West.
“Recent experience has however underlined that relatively rapid growth is not guaranteed for emerging economies, as indicated by recent problems in Russia and Brazil, for example. It requires sustained and effective investment in infrastructure and improving political, economic, legal and social institutions. It also requires remaining open to the free flow of technology, ideas and talented people that are the key drivers of economic catch-up growth.
“Overdependence on natural resources could also impede long-term growth in countries such as Nigeria, Russia, and Saudi Arabia unless they can diversify their economies over time.
“In short, while our analysis confirms that emerging markets have huge potential, they can also be an institutional minefield – both managers and investors need to tread carefully. Overall, Nigeria continues to be an attractive place to invest not because it is an oil producer, but because of the immense size of its domestic market and the extraordinary commercial energy of its people, which remains largely untapped.”
“Beyond Nigeria, we project that China will be the largest economy by 2030 on any measure.
“However, we also expect its growth rate to slow markedly after around 2020 as its population ages, its high investment rate runs into diminishing marginal returns and it needs to rely more on innovation than copying to boost productivity. Eventual reversion to the global average has been common for past high growth economies such as Japan and South Korea and we expect China to follow suit.”